Marriott Sees Room Revenue Rising This Year

Marriott International President and Chief Operating Officer Arne Sorenson told CNBC that he expects room rates and revenue to continue to rise this year.

Source: marriott.com

“The business traveler has gotten back on the road,” said Sorenson, pointing out that volume started to rise year-over-year in December and those increases have persisted every month in 2010.

According to Sorenson, there has been "substantial" growth in rooms occupied by corporate travelers and that is making it possible to raise room rates.

“With each passing month, we see the gap decline,” said Sorenson, who explained that room rates on average are still about 15 percent lower than they were in 2007.

Earlier, the largest U.S. hotel company by market value reported its latest earnings. The company, which operates hotels from the Ritz Carlton to Fairfield Inn, said it swung to a profit of $83 million, or 22 cents a share, on revenue of $2.36 billion.

That topped analysts' estimates, and the company's own forecast, which called for earnings to be between 15 cents and 21 cents a share. Analysts had expected revenue to be $2.48 billion.

Last year, Marriott reported a net loss of $23 million, or 6 cents a share.

Marriott's shares have risen 80 percent since March 2009, yet they have underperformed the upswing in the Dow Jones U.S. hotels index, which quadrupled in the same time period.

Sorenson dismissed the notion that occupancy needs to be around 75 percent to gain pricing power, saying it was “a gross oversimplification.” Instead, the company has begun "experimenting with prices" in the middle of the week, when it is seeing strong corporate demand.

On leisure and luxury, the COO emphasizes that leisure is not weak and “actually quite strong” compared to a year ago. The Ritz-Carlton’s year-over-year performance, however, is “stronger than any of our other brands,” adding that business consisted mainly of corporate customers.

“You can say luxury is back," he said. "When the values are right, customers are going to come and use those products.”